2016 (7) TMI 312 - AT - Income Tax

Eligibility of deduction u/s 80IB - ownership of land - Held that - Hon ble Gujarat High Court in case of CIT vs. Radhe Developers (2011 (12) TMI 248 - GUJARAT HIGH COURT ) held that for deduction u/s.80IB(10) of the Act it is not necessary that the assessee must be the owner of the land and secondly looking to the provisions contained in Setion 2(47) of the Act r.w.s. 53A of the Transfer of Property Act, by virtue of the development agreement and agreement to sell, assessee had for the purpose of income tax become the owner of the land. Considering the terms and conditions of the development agreement and other documents on record, assessee had acquired dominion over the land, which he had developed by constructing housing project incurring expenses and also takings risks. Thus, on the point of ownership and dominion of the property as a project, CIT(A) rightly granted relief to the assessee. - Decided in favour of assessee

Summary

Issues:
- Appeal against CIT(A) orders for A.Ys. 2007-08 & 2008-09
- Allowance of deduction u/s.80IB(10) disputed by Revenue
- Tax effect below limit prescribed by CBDT Circular No.21 of 2015
- Dismissal of Revenue's appeal due to low tax effect
- Disallowance of deduction u/s.80IB(10) for A.Y. 2008-09 by AO
- CIT(A) granting relief to assessee for A.Y. 2008-09
- Revenue opposing CIT(A)'s decision for A.Y. 2008-09
- Assessment of ownership and dominion over land for deduction u/s.80IB(10)

Analysis:

A.Y. 2007-08:
The Revenue appealed against CIT(A)'s order allowing the Assessee's claim for deduction u/s.80IB(10) of the I.T. Act for A.Y. 2007-08. The Revenue contended that the Assessee did not fulfill the conditions for claiming the deduction as the land was owned by a separate legal entity, the Housing Society, and the Assessee was merely a contractor. However, the Tribunal dismissed the Revenue's appeal due to the low tax effect, which was below the limit set by CBDT Circular No.21 of 2015. The Tribunal held that the monetary limit prescribed by the Circular applied, and since the tax effect was less than the specified amount, the appeal was not maintainable based on the Circular's instructions.

A.Y. 2008-09:
For A.Y. 2008-09, the Revenue challenged CIT(A)'s decision to allow the Assessee's deduction claim u/s.80IB(10) of the I.T. Act. The Assessee, engaged in a housing project, had its claim disallowed by the AO, citing that the Assessee was not the developer and did not own the land. However, CIT(A) granted relief to the Assessee, emphasizing that ownership and dominion over the land were established through the development agreement and other documents. The Tribunal upheld CIT(A)'s decision, citing the Hon'ble Gujarat High Court's ruling that ownership of the land was not a prerequisite for the deduction u/s.80IB(10) and that the Assessee had acquired dominion over the land for tax purposes. Therefore, the Tribunal dismissed the Revenue's appeal for A.Y. 2008-09, affirming CIT(A)'s decision.